PEMEX Faces Challenges Amid Oil Production Drop: IEA

This year, Mexico recorded the largest decline in oil production among all oil producers, according to the International Energy Agency (IEA). PEMEX’s reports indicate that since February 2024, production stands at around 1.5MMb/d. In May, the latest available data, production was 1.564MMb/d.

As per IEA’s information, Mexico’s oil production saw a brief recovery between 2021 and 2023 due to increased output from Quesqui. However, since the pandemic, the sector has struggled as PEMEX significantly reduced investments. The NOC has also faced a series of severe incidents with its offshore platforms, undermining public and investment’s confidence.

IEA further points out that a large portion of PEMEX’s production is concentrated in just seven of its 240 active fields, such as Ku-Maloob-Zaap. Looking ahead, the situation is unlikely to improve substantially, as no major new productive projects are expected to come online, except for the Trión field and Pit project.

Octavio Romero, CEO, PEMEX, says that the decline in production from 3.38MMbd in 2004 to 1.72MMb/d in 2018 has been reversed progressively, reaching 1.88MMb/d in 2023. Romero emphasized the increase in new production: of the 1.85MMb/d produced in 2024, 1.04MMb/d come from new developments and adjacent areas, 428Mb/d come from maintenance of the base production, and 317Mb/d come from the base production. He added that the company developed 54 new fields, 31 offshore and 23 onshore, highlighting the development of deeper wells such as Tupilco Profundo, Quesqui, and Ixachi. Moreover, the construction of marine structures was fostered during the administration with significant reductions in time, weight, and cost, he explained.

“The drop in crude oil production is quite clear; since May 2023, there has been a steady decline, as the main fields are depleting at a faster rate than new fields can be brought online,” Arturo Carranza, Energy Expert said. He also noted that PEMEX has faced technological challenges, such as deepwater exploration and unsuccessful drilling equipment tenders.

Mature fields have been of utmost importance for PEMEX. By 2018, these fields accounted for 53% of the national oil production and 46% of gas, comprising 63% of the reserves for that year. However, as wells reach their peak production, their performance starts to decline. PEMEX's strategic push for increased production is rooted in the historical prominence of the Ayatzil, Cantarell, Ku Maloob Zaap, and Balam fields. Leveraging advanced technology holds promise for augmenting reserves and maximizing output potential in these key assets. However, there are numerous challenges that these wells encounter when implementing recovery systems, such as well integrity, unwanted fluid and solid production like water and sand, and formation damage. 

César Granados, CEO, OPEX, considers that the services sector is understanding of the challenges identified by experts, especially the urgency of the decline in reserves and the difficulty of maintaining production objectives in this scenario. “Mexico not only needs to maintain mature fields but must develop new ones, which implies investing in exploration and production of wells. A point in Mexico's favor is that its exploration success rate is quite high compared to other countries, which can guarantee energy security,” he mentioned. Granados identifies that Mexico will continue investing in exploration and in the maintenance of mature fields. “The development of the 54 new fields during this administration speaks of the intention to follow this much-needed strategy, in addition to leadership to guide these efforts,” he added.